BlackRock Inc. is betting that the franc will extend the worst performance among Group-of-10 currencies as it weakens beyond the crucial 1.20 per euro threshold, the Swiss National Bank’s old exchange-rate cap. The world’s biggest money manager has entered a short position against the franc, which sank as low as 1.2001 on Thursday, a level not seen since the SNB removed the ceiling in January 2015. Its near-2 percent drop this month against the shared currency has been fueled by fading global political risks amid
improving Brexit talks.
The currency’s decline is a boon for the central bank, as it works in favor of the central bank’s goal to spur inflation. Indeed, just last week, SNB President Thomas Jordan reiterated that it’s too early for the monetary authority to tighten policy.
“Swiss monetary policy is very unlikely to change before the European Central Bank and so there’s no relative interest-rate differential being priced in there but what is being priced in is the improving risk sentiment” he said.
Source: Bloomberg Pro Terminal
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